Langel v. Betz
164 N.E. 890 (1928)
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Rule of Law:
The mere assignment of a bilateral executory contract, without an express assumption of duties, does not bind the assignee to perform the contract's obligations. An assignee's request for an extension of time to perform is not, by itself, an implied assumption of the assignor's duties.
Facts:
- On August 1, 1925, the plaintiff contracted to sell real property to Irving W. Hurwitz and Samuel Hollander.
- Hurwitz and Hollander assigned their rights under the contract to Benedict.
- Benedict subsequently assigned his rights to the defendant, Isidor Betz.
- The assignment to Betz contained no provision delegating the performance of the assignor's duties.
- At Betz's request, the closing date was extended from October 2, 1925, to October 15, 1925.
- Betz stated he needed the extension because the title company had not completed its search.
- On the extended closing date, the plaintiff was ready, willing, and able to perform, but Betz did not appear and refused to complete the purchase.
Procedural Posture:
- The plaintiff vendor brought an action for specific performance against the defendant assignee, Isidor Betz, in the New York Special Term (trial court).
- The trial court granted judgment for the plaintiff.
- The defendant, as appellant, appealed to the Appellate Division (intermediate appellate court).
- The Appellate Division affirmed the judgment of the trial court.
- The defendant, as appellant, then appealed to the Court of Appeals of New York (the state's highest court).
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Issue:
Does an assignee of a real estate contract, who did not expressly assume the vendee's obligations, become liable for specific performance by merely requesting and obtaining an extension of the closing date?
Opinions:
Majority - Pound, J.
No. An assignee of a real estate contract does not impliedly assume the contractual duty to perform, and thus become liable for specific performance, by merely requesting an extension of the closing date. The court reasoned that the simple assignment of a contract does not create privity of contract between the vendor and the assignee, nor does it imply a promise by the assignee to assume the assignor's duties. For an assignee to be bound, they must expressly or impliedly enter into a personal and binding contract to assume the obligations. The court distinguished this case from situations where an assignee seeks equity (e.g., sues for specific performance), which would subject them to the court's judgment. Betz's request for an extension was an 'equivocal act' that was as consistent with a need for time for deliberation as it was with an implied promise to perform, and therefore did not establish the necessary contractual relationship or assumption of duty.
Analysis:
This decision reinforces the traditional common law distinction between the assignment of rights and the delegation of duties in contract law. It establishes that, in the absence of an express assumption, an assignee's liability will not be implied from conduct that is ambiguous. The ruling protects assignees from inadvertently incurring substantial contractual obligations. By declining to adopt the more modern view proposed by the American Law Institute's Restatement, which presumes an assumption of duties, the court maintained a higher, more formalistic standard for creating liability in an assignee, placing the onus on the other original party (the vendor) to secure an express assumption if they wish to hold the assignee directly responsible for performance.
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